April 2nd, 2010

The 3-D Remake

By Kyle Morich

A swarm of 3-D films will be hitting your local theater this weekend (Dreamworks’ How to Train Your Dragon, Disney’s Alice in Wonderland, and Warner Brothers’ Clash of the Titans). Motivated by the financial success of James Cameron’s 2009 3-D epic Avatar ($740.4MM in US box office receipts as of this writing), Hollywood is scrambling to deliver more 3-D films to audiences, along with a pair of uncomfortable glasses and a $3 to $6 per ticket price premium.

Wait, haven’t I seen this plot before? In 1953, Warner Brothers released House of Wax in ‘Natural Vision’ 3D and garnered tremendous box-office success: $5.5 million on an investment of $680,000. Within two years, Hollywood output sixty-nine 3-D features across a variety of genres, until the fervor died in 1954 for a variety of reasons: the difficulty of creating legitimate films within such a gimmicky medium; the discomfort of the audience with the 3-D glasses; and the release of CinemaScope, an anamorphic projection process designed by 20th Century Fox to combat 3-D (marketed as “The Modern Miracle You See Without Glasses”) that paved the way for the modern ‘widescreen’ cinema aspect ratio.

The point is that a frenzied clamor by Hollywood to ‘wow’ audiences with 3-D spectacle is nothing new. The problem is the cinema marketplace is profoundly different than the one in 1952, and while no one can deny the beauty and wonder of a well-executed 3-D film, the attempt to boost revenue with ticket price premiums is toying dangerously with the already fragile consumer habit of going to the movies.

Box office receipts have been in decline for years. Headlines for “record” box office takes are not the result of more tickets sold but a reflection of higher ticket prices. James Cameron’s other box-office smash Titanic made $600 million in domestic receipts (in 1998 dollars), but sold 128 million tickets. Avatar, in comparison, has seated approximately 78 million.

The habit of going to the movies has always dominated a particular context in the mind of the American consumer. I go to the movies to enjoy the experience of seeing a film. This behavior is reinforced by many aspects of that experience: the darkness of the theater; the quality of the sound; the smell of the popcorn; and even the excitement of leaving the house and enjoying a two-hour escape. But consider all the factors that are punishing my decision to view a film at the theater: the drive, the line, the $10 ticket, the $7 bag of popcorn, the $5 soda, and the jerk behind me who keeps texting his ‘bros.’ The movie theater habit has been disrupted by two vectors: price and convenience. With Netflix, On-Demand, and streaming set-top devices, it has never been easier to get movies in the comfort of my own living room. I can get films for a small monthly subscription fee or charge to my credit card. Yes, there’s a three-month delay between the film’s release and my viewing, but Metacritic scored it a 52 out of 100, so it’s not like I need to see it right away. I also just bought a 60-inch HD plasma screen, a blu-ray player, and a full surround sound system. Convincing to me that this new behavior, watching movies at home, is inferior to the old one, going to the theater, is a tough sell.

Along comes Avatar and its slew of 3-D half-siblings and suddenly Hollywood has a real argument for why I should go out to the movies: I can’t experience 3-D at home, and the buzz makes me want to see it now. Yet when I pack up the family and head down to the multiplex, my ‘thank you’ is an extra five dollars tacked on to each ticket. The wonder of 3-D was a strong enough thrill to tolerate the inconvenience of heading to the theater, but asking me to spend even more money on top of the highly inflated ticket prices is too much. Next time, I’ll stay home.

Hollywood has been given an opportunity with the 3-D fad to get its audiences back into the habit of going to the movies, but it’s greed and short-term thinking is undermining that opportunity. If Hollywood does not respect the power of the price vector in consumer decision-making and continues trying to milk upwards of $20 per ticket from its audiences for 3-D fare, look for this latest fad to taper off throughout the year and theaters to be left with what they started with: empty seats.


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